CBA chief executive Ian Narev links the growth of the Australian economy to the success of banks

ANALYSIS: With Australia about to claim the world record for unbroken economic growth, CBA CEO Ian Narev has two messages for Canberra.

Commonwealth Bank CEO Ian Narev has linked the growth of the economy to the success of the banks. Picture: AAP

WITH Australia about to claim the world record for unbroken economic growth, CBA CEO Ian Narev has two messages for Canberra. First, we might not have got there without the banks; and second, be careful about creating new rules that make life tougher for lenders.

In his opening remarks to phase two of the parliamentary inquiry into the Big Four, Narev said that in the first six months of the 2016-17 financial year, CommBank lent $109 billion to 140,000 first-home buyers and 12,000 small businesses. Farmers and other rural customers received $1 billion of funding for their enterprises.

Since October last year the number of people employed by the bank increased by 3200, he said, and it had paid nearly $2 billion in tax — more than any other company.

CBA boss grilled: ‘It beggars belief’

Commonwealth Bank CEO Ian Narev has linked the growth of the economy to the success of the banks. Picture: AAP

“I ask you to consider how the economy may have fared if our banking system had performed like those of many other developed markets,” Narev said.

He went on to say: “Last week I attended four days of meetings in four cities in the United States and Canada. I heard again and again from investors how important it is to them that they continue to see policy that maintains the strength of the banking system, and that requires an effective partnership between policymakers and banks. This partnership is critical to our remaining unquestionably strong, and being perceived to be so, here and abroad, so we can do our job for our business and consumer customers in good times and in bad times.”

As he has had to do repeatedly since 2015, Narev spent much of his appearance before Parliament explaining how he didn’t know about the misconduct at CommInsure and the bank’s Commonwealth financial planning arms before the scandals came to light in the media.

Once again he was apologetic and contrite.

But there was a change in tone as he and the other bank CEOs take a more aggressive stance in a bid to head off Labor-led calls for a royal commission.

He wanted to remind his interrogators that when the bank makes money —— mountains of it — that’s good for the nation.

He was asked by Labor MP Matt Keogh about receiving a “strike” from investors over plans to restructure the test for awarding bonuses to executives. The proposed new test would have added a “vision and values” component. Shareholders rejected the plan.

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The Commonwealth Bank posted a record first-half cash profit last month. Picture: Hollie Adams/The Australian

In expanding on his explanation for this, Narev told a brief story about being stopped in the street recently by a man aged about 70.

“He said to me ‘thank you for the dividend’,” Narev recalled.

CBA had paid $3.4 billion of dividends to 800,000 Australian shareholders since his last appearance before the inquiry in October last year.

“Many of them live off the Commonwealth Bank dividend,” he said.

While Narev will still be saying sorry for CBA’s misdeeds for some time to come, he wants it known that the bank benefits a lot of people, too.

A royal commission could be “very damaging” he said.

In other words, if you want Australia to remain the economic envy of the world, be careful. Very careful.

Malcolm Turnbull went to the last election with the slogan “jobs and growth”. More recently Bill Shorten has taken to using the phrase “fairness and growth”.

No politician wants to be seen to be killing growth.

Linking the success of banks to economic growth is a smart argument.

Originally published as CBA chief executive Ian Narev links the growth of the Australian economy to the success of banks